tv Closing Bell CNBC December 18, 2012 3:00pm-4:00pm EST
it specifically says that the information can be sold to advertisers and marketers, so not only are they tracking what you do on the internet, now they are going to track your photos, where you go, identify maybe what you like to do. >> and you can't opt out. the only way to opt out is to leave instagram. >> a big backlash on the web, taking it too far. take a picture of your kid. now marketers know what your kids are wearing. let's think about this, america. >> my outrage of the day. on that note, thank you so much for watching "street signs." >> that is a thing that makes you go hmm, and we'll see you tomorrow. "closing bell" is next right here on cnbc which is the worldwide leader in business news. >> hi, everybody. we're into the final stretch. welcome to the "closing bell." i'm maria bartiromo with the new york stock exchange. the more wall street washington is rising above, the higher the market goes. >> rejection of how john
boehner's plan "b" thatty had came out with today. the major averages are all trading around two-month highs today because it seems like progress is still being made on some kind of a deal. here's where we stand right now. the dow up 98 points, was up 125 at the high, and then the white house rejected and some comments by senate majority leader harry reid on that so-called plan "b" proposal from john boehner, sort of took some of the wind out of the sails. nasdaq still up 1.25%, a 3348 and the s&p 500 index is up 12-plus points right now at 1443. >> while the dow on pace for the first back-to-back triple-digit gains in nearly five months. can we hold on for the final hour? >> let's talk about that in our closing bell exchange. carol roth, the author of "entrepreneurial equation" is with us. from chicago, keith springer from springer financial adviser and john carpina is on the floor with us, and rick santelli, of course, is in chicago as well.
carol, you've been skeptical about this market, but you, if i read you correctly, any rally that's going on right now, you might want to fade. you're not too convinced at the long-term outlook right now, am i right? >> i think what we're going to get. we're going to get a deal, but the deal isn't going to solve our problems, and so in the short term everyone is going to be very, very excited about this. we have a deal. uncertainty is off the table. we're printing money. i think that's going to be very good in the short term. my problem in the longer term is the long-term drag from all of these companies not investing today. they are doing share buybacks, they are doing special divide s dividends. >> right. >> they are not investing in their companies, so in the short term it will be fantastic. i just don't know what's going to happen in the long term >> i wonder what will happen in the short term actually, keith. we don't have any specifics on the table once again, and here we've got this hope an optimism in the market. do you think we're actually going to flesh this out and get a deal by next week? >> maria, i think absolutely we
are. i think it's celebration time on wall street. >> feels like it. >> a deal almost being done. you know, we're pretty much in a position of buy the rumor right now. i am afraid a little bit when the deal comes through. we'll get a sell the news, a little bit of a selloff. the fed printing a lot of money right now, i think it will be very positive over the next few months. i agree next year is going to be a difficult time. this will mean austerity, higher taxes, lower spending which will affect corporate earnings, and the one thing i'm more nervous about is complacency. people are getting very complacent and that's the thing that bothers me the most. the market never goes down when people expect did t. >> that's what i'm saying. it feels like there's a lot of complacency and have all these expectations, but yet to see anything really materialize. >> what do you think, jonathan? is that the case? >> i think everyone is kind of grasping at straws at this point right now. what's happened in washington is there's been a game of chicken and nobody has decided to blink. people are blinking and showing their cards a little bit, and
the market is reacting positively to that, but at some point when we get down to the nitty-gritty of what's going to be there, i'm not sure everyone is going to be so satisfied that the deal that's put in place is really going to help us moving forward, first quarter, second quarter next year. everyone's investment horizons have been so shortened by what we've lived through over the last four years that we have to look further down the road. >> rick santelli, very much a risk-on market right now when you consider the yields in treasuries are going up. the dollar index is going down. the price of gold is going down sharply. i mean, it's very much risk-on right now, isn't it? >> it is, but there's nuances to everything you said. you know, if you look at yields on 10s and 30s we're at two-month highs. i think at top of the show you said equities are at a two-month high. they continue to correlate. in terms of commodities, commodities are finding that ultimately demand really does make a difference and a weaker dollar isn't the only variable to higher commodities, not the least of which to mention profit-taking on some of the mod
tis like gold, and my final point, is you know, if anybody out there still thinks that because the dow and the s&p and the nasdaq is going that the economy is firing on all 4% growth gdp cylinders wake up so to use that as a divining rod for the fiscal cliff in my impression is a bad idea. >> let me tell you, today we've got the banks up once again. we'll talk to meredith whitney about her upgrade of the sector yesterday, but, keith, is this an air yaw want to put money into, or do you think the stocks, i know they have had a very good year on the heels of a terrible year the year before. what's your take on financials? >> financials are by here. i think they are attractive because of the spread. the fed has made sure the financial are not going to lose money. they put a put in under them. they have made largely the ability for them to borrow at zero, and any profit on there is attractive for financials. i think down the road we have a problem when we start pulling money out of bond market. the fed has really spurred economic growth in housing, and in mortgages, but when they
start raising interest rates and no longer add money to the market in housing, we're going to see a pullback, and you're going to see more defaults. that's when the banks run into trouble a year, year and a half from now, and right now i think they are very attractive. >> carol, it's not just the financials. you look at other sectors, consumer discretionary is at a 52-week high. the airline have set 52-week highs five days running. housing stocks have been on fire. i mean, all of these seem to point to a continued growth for the economy, but you're still skeptical. >> i am skeptical. what i do think we'll see is we'll see a shift, once the uncertainty comes off the table, so to speak, or at least perception of uncertainty. what will happen is people will come out of defensive stocks that are very highly valued right now, like consumer staples, like utilities and probably go into companies that have more foreign exposure, maybe technology to chase that growth, so i think that you will have a little bit of turnover in terms of the types of investments that the markets are going to be going after.
>> in terms of broad economic issues in 2013, what kind of a year are you looking for, jonathan? >> i think once we get into the first quarter, we're going to see some growth that's going to continue from what we've seen already in the past. everyone is going to continue to watch this unemployment number, and as it's been trending in the right direction, everyone's been adding their figures and their keys to why it's moving one way or the other, but once we move forward there, i think that's going to help our markets move to a higher level there. the momentum that we've seen in this market is going to continue. >> all right. we'll leave it there. thanks, everybody, really appreciate it. see you soon. >> heading towards the close, we've got about 50 minutes left in the trade, 55 minutes. splitting hairs here. up 108 points on the dow. the amount of selling that occurred after the harry reid comments were made public has pretty much been erased. we've come back. >> financial analyst meredith whitney is having a huge change of heart on citi. remember this interview on citi. >> citi hasn't been investable
in four years. >> what would you take for you to invest in citi? >> a new brain. >> she's got a new brain. >> why is she now bullish on the bank and a couple of others? she'll join us with exclusively her call yesterday on the financials. >> wizard of oz i guess will join us as well. house speaker boehner calling the president's bluff and agreeing to a tax hike on millionaires and billion airs. >> and when does senator rand paul think we'll get a deal? he'll join us coming up on the "closing bell." stay with us. more in a moment.
welcome back. we're now with banking analyst meredith whitney having a change of heart on some of the banks. yesterday she announced she's turning bullish on financials and upgraded bank of america, discover financial and citi to a buy. take a look at those stocks today, and they are moving on that call. meredith joins me now to talk about the industry and the
entire group. thanks for joining us. >> so good to see you. >> what is getting you bullish on the banks today? >> we went bullish yesterday morning, and i think this is a really, really important time for the financial. you have three things going on. most importantly clarity. more clarity today on the financials than you have in the five years since the financial crisis began, and then you have real fundamentals building momentum in terms of bank of america as an example has taken $65 billion of hits in the past five years, in the past four years, and so much of that is junk out of the trunk actually. looking in the rear view meror, so you have momentum for these names and a lot of capital generation built, and number three you have cat lifts, so you can -- all eyes can point to march, end of march when the fed comes out with the results and gives banks the flexibility they fought for for five years. so this is a culmination of three, four years worth of work at bank of america.
the same for citi, and discover is similar, but discover's got real growth underneath it. what's interesting also about this call is it's not dependant, at least for citi and bank of america, on a lot of revenue growth. it's dependant upon internal execution, so in bank of america's case they are going to generate over $18 billion in -- in capital. they are going to return to shareholders. i mean, i have not seen an opportunity like this in four or five years >> i like what you see about the catalyst, because number one, you say these banks are adequately capitalized and we've seen the capital being raised over the last couple of years. you wrote in the report yesterday that you think bank of america could quadruple its dividends? >> that's conservative. that could be low by a factor -- they could do two times that. what was said is the maximum payout, dividend payout ratio for the banks is going to be 30%. we took 16% of that so basically half of that, and our assumptions, the math and
incredibly intensive analysis we went through this, it incorporates extremely conservative assumptions so when we started yesterday, 45% upside for bank of america and 35% upside, and this is short-term upside for bank of america over, you know, a $100 billion market cap stock. hard to find upside like that in any sector. it's still using -- i mean, we could be conservative. i think we are being conservative because just out of cash under the mattress type of, you know, comfort levels we took, you know, base case scenarios. >> in terms of citi, you know, for a long time we were worried that the term failed the stress test, issues about the capital there. you're comfortable upgrading citi. where do you think the dividends are there? what do they do with the cash and no worries that there's another failure in the stress test. >> well, i think that's, you know, what happened -- i remember being on your show right after the stress test, and i couldn't believe any bank failed the stress test. >> right. >> it's sort of beyond
comprehension. take low expectations and exceed them or set low expectations and exceed them. i think they will have a very, very different tact this time around when they submit c-car application by the end of the month. the fed will be more comfortable for citi buying back shares than dividend because citi is pretty much an unproven story. what i like now about this management versus the old management, instead of going out and trying tonight biggest, greatest global story, they are really focusing on internal execution and right-sizing the company. they have needed to do that for a long time. i hope they go for as far as they need to. >> the c-card, this is an event that the fed will either approve or disapprove of the capital plan for these banks. >> yes. >> and you're expecting the fed will approve all these dividends as well as capital -- as well as stock buybacks. >> to a certain degree. the fed will be more comfortable. if sympathy commits to buying shares back and something
changes and there's more uncertainty around citi, they can halt their share. they won't have to cut their dividend again, but for bank of america i expect them to do both, increase their dividend and buy shares back. >> i guess i was reading an article recently that the federal reserve had become so involved in decisions about acquisitions, decisions about consolidation in the sector. you probably saw that as well. just a couple of months ago there was a journal report, and i'm wondering, it got me thinking about dodd/frank. are the worries about the regulatory environment not there for you anymore? does this not crimp into the bullish story for you in 2013, dodd/frank? >> it's -- it's kind of not a factor. dodd/frank puts -- well, dodd/frank is yet to be entirely determined, but dodd/frank puts a cap on the companies' sort of old way of doing business and being profitable. these companies really need to ceo show they will make structural reforms and decide what they want to be when they grow up, and what i like about bank of america it committed to this in 2010, right? a lot of banks still are arguing
that the reason why they are underperforming it's cyclical, not structural, so dodd/frank is not -- you know, dodd/frank is sort of an outside influence on the company, part of the structure of your bank, but this is basically right-sizing the offense structure of the banks, so that's what this calls about. revenues, we're very conservative. don't expect a lot of revenues. i think one of the most -- some of the most damaging things for the -- for the banks have been the card act which told them how they could price and re-price on credit cards. >> prop trading, the volcker rule. >> we'll see how that happens. basl 3, nobody excited about the implementation and the mortgage industry. i'm not going to say entirely digested but that's enough of a buzzkill on these stocks that it's fairly well priced in. now those who can execute the best and the actually can be
leaders and show,000 how they can improve real profitable by right-sizing their businesses will outperform. >> now, you upgraded these three, citi, b of a and discover. you said you'd see meaningful upside protection for the whole group. >> yes. >> what kind of returns are we talking about for 2013? should an investor be buying into this now even though bank of america, for example, is the best performer in 2012 after being the worst performer in 2011 in the dow? >> yeah. i think bank of america has at least 35% upside from here. >> wow. >> so what happened last year, you know, going into 2012, investors were worried that they would have to do some massively diluted stock transaction so the stock way oversold, and i think that investors really didn't give brian moynihan credit. the movement in the financial was really in the first quarter of 2012, and since then they have been volatile so very much, you know, everyone can say, oh, well the stocks have run in 2012. importantly let's look forward and say there's incredible
growth opportunity within the financials, particularly bank of america, citi, discover, and there are others. i think the underlying support is housing has close to bottom so that is a great, you know, tail -- sorry, head wind relieved from the banks, and i think the banks have -- in bank of america's case they have almost doubled their capital position since the credit crisis so they have come a long way, and it marks a really -- you know, it's five years later. it's taken -- i expected it to take something like five years. that's extraordinary. i don't think the industry has healed, but a lot of these financials are on the road to recovery, for sure. >> last time we spoke you were still expecting layoffs in the financial services sector. how are bonuses going to look in your view, and what about the layoff story? >> okay. so for two years we've been talking about hundreds of thousands of layoffs, and that's where we've come over two years, not a story anyone likes to hear
because i -- because this industry loves being bigger and more people and whether it's profitable or not, so, you know, in the case of bank of america, they have laid people off. in the case of ubs they have laid a lot of people off. i don't think that a lot of people in the industry have even really started so we're still encouraging banks to get smaller, leaner, more efficient. bigger -- the only thing bigger, where bigger is better is bigger profitability is better. >> sure. >> do you judge -- like, some of these -- some of these companies are judging themselves still by the number of employees they have. you know, they are taking money and paying managements and not paying shareholders, and shareholders are paying them back with lousy share prices. >> right. at a certain point something's got to give and board members have really got to press for much more -- much more aggressive right-sizing. >> if the banks go higher in 2013, broad market call here. if the banks could g higher in 2013, does that lift the whole market, do you think? >> i think it's a big bonus for
the market. i'd rather not -- i think from a global standpoint the u.s. looks so attractive. equities are cheap in the u.s., and it's going to be just like the u.s. treasuries have been for the last five, six years, a flight to quality. you'll see a continuation flight to quality. i'm extremely, extremely constructive on the market. >> real quickly on the bone u.s. we didn't get there. >> sorry. >> some firms are actually moving the bonus payments to the end of this year to avoid the higher capital gains tax. what's your take on bonuses? >> meant to answer that. importantly whatever happens with bonuses will be no indication what happens with next year because in 2009 a lot of people were hired on contracts, so the firms are forced to actually still have higher payouts than they want to have. 2013 is going to be a much ruder awakening for salaries and total comp on wall street. >> wow. meredith, always nice you have to on the program. >> thank you so much. >> founder and ceo of meredith
whitney advisory group. >> want to update you on the tragedy in newtown tragedy. danielle lee back with the very latest. >> reporter: good afternoon. students returned to their classroom today aside from those attending sandy hook elementary, and when they did they were greeted by increased security and counselors on hand in case students needed to process. one parent said it was harder to send her son back to class and she believes this is a necessary part of the healing process for these students, but as all of that happens, as the students return to class just up the way behind me is a memorial still filled with lots of people, crowds of people struggling to move on. there were two more funerals today, and right now a wake is under way for that teacher that we've heard so much about, vicki soto works died trying to protect her children. the school, sandy hook, is still indefinitely closed while police investigating, even a nearby town says they can have another school red the for those students by tomorrow. the district has not decided
when they will be ready to have those students return to class. reporting live in newtown, connecticut, danielle lee. bill, back to you. >> thanks, danielle. i'll take it. 45 minutes, 40 minutes rather before the closing bell sounds for the day. a market that's holding on to the gains very close to the highs, up 98 points, shy of the high, 13,333 on the industrial. j.c. penney and groupon's ceo on herb greenberg's list of worst ceo. he'll be along to tell us why he's being so mean to these ceos. and coming up, home depot founder ken langone will join me coming up and will join me for the entire hour next hour on the "closing bell." [ male announcer ] citi turns 200 this year.
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in the face of the fiscal cliff? >> so bad they are actually good. j.c. penney and groupon have been miserable stocks this year, and their ceos are both in the running for herb greenberg's worst ceo award of 2012 which he'll bring you live. could there be more upside for these troubled names? let's talk numbers on the two today. on the technical side, it's richard ross and on the fundamental side it's steve cortes with veracruz. rich, look at the charts. which of these do you prefer, or do you prefer them right now.
>> well, bill, the case of the biggest loser here, but overwhelmingly i prefer groupon. stock became public a year ago in facebook style. lost 90% of its value in just 12 months. had a nice bounce here. we've taken out the downtrend from the february high and taken out 509-day moving average. you see that key resistance, that key level at 550. i think we're going to take that out. we have a v-shaped reversal. a lot of momentum. we see projected upside to the 200 day, 8.40, 8.50, a very nice upside. we'd be a big buyer of groupon. j.c. penney, stay away from j.c. penney. the stock has been disappointing investors for over five years. down 87% from the 2007 high around $90. gotten a little bit of a bounce. you want to fade that bounce. don't trade that bounce. >> okay. >> you can sell your shares to steve because you want to buy them, right? >> i'm on the exact other side of this. bill, would i say trying to
choose between these two is a little like asking me which one do you want to go on a date with, estelle getty or bea a.r.-they are, my answer is neither but if i must chose between these two stocks i think jc penny is the far better alternative. on the groupon side, fundamentally this is still a coupon company. this is not truly new technology, and it's a coupon conditions by the way, that has some incredibly scary competitors, mainly google and amazon. on the j.c. penney side, i do think j.c. penney has an interesting turnaround story here. the stores of ron johnson have been able to revamp and institute his new model of a collection of boutiques. those stores have seen the revenues double. only 10% of the stores have been revamped, but if they can continue to maintain cash flow long enough. >> i don't like what ron johnson is doing. since this guy's taken over this stock has done nothing but go down. it was about the product, not the concept. anyone could have sold ipads and
ipad minis and iphones over the year, the complete opposite and failure at jv penny the want to avoid those shares. >> rich, of course, the stock has done poorly, but it's done much better since the ipo of groupon of the you've been much better served actually being in j.c. penney than being in groupon. i would also say this. i think there is a cushion you have in j.c. penney than not groupon and that's the real estate. arguably the real estate of jc penny is worth more than the market cap of the company. with the underlying protection i think you have a bit of a free call on bill actman, one of the greatest investors of our time, and on ron johnson who has an outstanding record, albeit not late lately, but over a portion of his career. >> you want to buy real estate, buy a home builder, a house on low interest rates in this environment. don't buy j.c. penney. >> there you go. gave you guys a tough asign thement today, but you handled it both. nice to see you both. steve, let you get back to watching "the golden girl" reruns on tvland. >> thank you. >> maria. >> 30 minute before the closing
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welcome back. huge developments in the fiscal cliff negotiations, but are we closer to a deal in. >> eamon javers here with the latest edition of as the fiscal cliff turns. eamon? >> been something of a soap opera today. the latest market-moving development coming after 2:00 this afternoon when senate democratic leader harry reid told reporters that the republicans had in effect walked away from negotiations. take a listen to senator reid. >> the republicans have walked away from serious negotiations we've held during the past three
and a half years. as soon as president obama was elected, we started talking about the need to do something with the long-term financial security of this country. compromising takes courage. walking away, as they have done is so easy. >> now what reid was referring to there was a plan "b" option laid out this morning by speaker john boehner here on the house of representatives side of the capitol saying if we can't get a big deal with the president negotiated in time, we're prepared to move some legislation that would extend the bush tax cuts for everybody making less than $1 million a year. that he said was plan "b" for republicans, and he and his aides emphasized that they are not in fact walking away from a deal. they say they are still negotiating, but they just have to have something ready in case of emergency, in case they get up to that deadline and can't get to the deal. now the next development we're waiting for here in the capitol building is 5:40 this evening. all house republicans will gather in another conference
meeting, and they will talk about this plan "b" and will talk about scheduling details from now until the end of the week, and i think coming out of that meeting we might get a better sense of whether or not we're on track for a deal here or whether or not they are leading more towards a plan "b". >> i thought the president want that had anyway, he wanted to make sure that the tax cuts were extended for the low end of earners. is the issue $1 million versus 250? >> yeah, exactly. >> okay. >> what the president has proposed right now he would extend them for everybody below $400,000, so they are negotiating on the number there, and what the white house has said in the past is the that if you go too much higher than that, you don't get enough revenue to make a big dent here, so that's where this negotiation is shaping up, but i've talked to some republican aides in the house and the senate who are sort of gleefully mulling out proposals from democrats here on capitol hill who have proposed that $1 million figure in the past and saying, hey, wait a second, if it was fine six months ago from democrats how
come they won't take that offer now and the answer is because they don't want to take that offer when they think there's a bigger deal that can be had right now. >> i thought because the republicans were against doing a deal where you just lower tax rates for one portion of the country and you're not getting spending cuts on the table. >> that's right. >> so i don't understand why -- i mean, it seems like the reports are showing that the republicans are walking away, but i thought they didn't want to accept a deal where there's no spending cuts anyway. >> they don't, and that's why a lot of folks think that this is sort of a bluff by speaker boehner, that he's effectively telling the president, look, we've got another option here, if you don't come to where i need you to be on the negotiation i'm going with plan "b." it's a threat but a lot of folks say it's an empty threat because of the fact that you're laying out is a lot of republicans don't in fact want to do something. they want to do something about the sequester and don't like the idea of raising taxes on the rich. eventually they will have to come to some sort of compromise on the issue. >> the plan "b" got a lukewarm response from the conservative
wing of the republican party. that's for sure. eamon, we'll see you later. closer to a deal or actually moving further away. joining me now is judd gregg, co-chair of the campaign to fix the debt and former republican senator from new hampshire and jeanne shaheen democratic senator from the state of new hampshire, and they both join us today. good to see you both. >> nice to be with you. >> senator gregg, you released a statement saying you're encouraged by the negotiations but your fear is that there's going to be so much compromising that it will be a watered down bill. is that still your feeling right now after what you're hearing today? >> well, actually, we think there's been significant and important progress, but the problem is that the debt still goes up. the purpose here is to get the debt and the deficit simpson/bowles, the commission i served on, said you need to reduce the debt and deficit over ten years and if you take the place where the president and speaker are, they both made a lot of movement here, in my
opinion. they are around 2 trillion and throw in the 900 billion from a year and a half ago, you're up to about 3 trillion. you're still $1 trillion short, so we're concerned that the air may go out of balloon if the agreement is reached and we don't get to where we need to go, and the goal here is obviously one thing, to make -- to put our nation on a path to solvency and pass on to our nation a stronger country, and you're not going to do that unless you get 4 trillion over ten years because the debt-to-deficit ratio goes up too much. >> that's the issue. isn't it extraordinary that here we are, bill, eight days, eight trading days left in the year, eight trading days left in the year, until the deadline, and we're still talking about plans that actually do not even attack the debt and the deficit. what -- are we forgetting the goal? >> well, maria they do. i don't want to cut in on jeanne's time here, but this is progress. >> you're doing fine. if they get to 2 trillion, that's a -- you know, if you put jeanne and i in a room she would solve this tomorrow.
we were both governors of the same state. we can figure this out. hopefully they can figure this out. >> what about that, senator shaheen? >> are we on a path to actual deficit reduction? that really is the goal of all of this. do you think they are going to do that? >> well, it is the goal, and i agree with senator gregg. what we really need is a long-term big deal that addresses the debt and the deficits. >> does it sound like we're going to get it this time? >> well, what we could do is get a two-part deal, and i think there's still an opportunity to do that, so we could address the automatic cuts that go into effect in january. we could increase rates on top income earners that would help us pay for putting off those automatic cuts and give ourselves some time to further negotiate the final several trillion dollars that judd gregg has indicated that i support that we need to get, to and i think what's important here is that we need to do it in a way that is balanced, that's comprehensive, that looks at all
aspects of the budget. the domestic, the defense, the mandatory programs and it looks at revenue, and the fact is months ago the senate passed a proposal that would have passed the extended tax cuts for everybody 250 and under, and, you know, if we're going to take up a plan "b" why don't the house take up the senate's plan "b?" >> have you seen adequate spending cuts in all of this, senator gregg? i mean, it feels like once again this conversation is dominated by tax rates. >> well, i think that's why speaker boehner's position is so important and so accurate. he said he wants at least one for one. we're now at $1 trillion on the table, maybe 1.2 trillion in revenues, and so he said, well, i want 1 trillion or 1.2 trillion in spending reduction. he's absolutely right insisting on that. no reason doing a deal if you don't get that, and it has to come entitlement reform. now, there is progress here which is that the president, as
i read, i haven't talked to him, has implied or said that they are willing to do the koala change which is absolutely essential. got to call it a miscalculates and we need to go into health care and take a hard look at making health care deliver services based on quality versus repetition, things like that, and the speaker is right to insist on spending reductions that at least equal the revenues. >> let me just ask a procedural question, senator shaheen. are you guys hearing? going to be around for the weekend, going to be here for christmas eve? >> sounds like we'll be here through friday anyway, that we'll be back on the 27th after the christmas holiday to continue to take up whatever agreement has been reached. >> if we don't have it by friday, we'll have to wait until new year's eve
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keeping markets in the green today as we head to the close. can investors take their eye off those headlines and focus on economic fundamentals? >> joining us right now to weigh in on cnbc contribute richard bernstein and jeff tanose of jpmorgan and our own bob pisani. gentlemen, thanks for joining us. rich, what do you think about fundamentals going into 2013, corporate sector, economics? >> i'm actually quite bullish about 2013. i think we're going to start getting, as the year goes on, easier comparisons for corporate profits. the corporate sector as we know is loaded for cash. i think when we get beyond this uncertainty and corporations have more certainty, i think we're going to see an m & a wave because they have underinvestmented for the future by hoarding all the cash so i think they will have to buy growth so i think 2013 could be a very good career. >> what do you think, joe? >> i agree. everything we've been dealing with the past year has been the uncertainty. is it europe, the election? is it the fiscal cliff, but as you go through those one by one, the election is now behind us. i do believe we'll have a resolution on the fiscal cliff
and if you look at europe, the ecb put a gigantic band-aid on this so next year will be a big year. >> did you see the s&p upgraded greece today by six notches? i had to hit the machine to make sure that was the correct number there. >> well, you know, a lot of volatility in rate. >> bob pisani, what do you think today? a pretty good real under way? all about the fiscal cliff? >> well, the markets, is bullish because the markets are acting like 2013 will resolve a lot of problems so we've multi-month highs in the stock market. we have the safe haven, gold and bonds just getting hit badly again. i mean, bond yields are moving up. gold is moving down on a day when the dollar is -- is weak today, so the markets are sort of acting like things are actually going to resolve themself. even now, maria, you might notice, the headlines out this afternoon aren't bullish. markets believe a deal is coming quickly. >> so do you guys. you don't have any necessarily
different guidance or expectation or reports than we do, and you both are very much in step that a deal gets done what. if it doesn't? >> i kind of think what's going on right now is a little dance. everybody has to appeal to their constituency so what they can do is come out with plan a, b, c, d, e, f and g and if a little bit of every plan goes a little bit into the final plan, they can say we fought for what we wanted and we won. that's what we're seeing and the fact that we're getting this means that we're getting closer to an agreement. >> we've highlighted in the past, joe, financials are very strong right now. consumer discretionary hitting 52-week highs. airlines have been hitting all 52-week highs. home builders. do you by strength in this market right now, or do you look to the laggards and hope they play catchup? >> i think before -- until we receive some type of an agreement i'm still positioned a little bit defensively. thinking about defensive sectors and lower beta strategies, but after we do receive an
agreement, we're all on the same page here, it's going to happen but just a matter. when when you look at cyclical sectors there's opportunity. >> why don't you guys -- can i ask why don't you guys take the flip side of this art because a lot of people have been arguing this is the start of american austerity, you'll have head winds in 2013 with lower government spending, lower defense spending and just a generally more austere environment. >> any deal will mean spending cuts. >> how is that a positive for the market? >> bob, you remember like two weeks ago everybody was saying if the government would step aside the private sector would do very well so what we're going to do is see the government step aside to some extent. it's a question how much of an extent and see what the private sector can do, but, again, the important thick to remember here is this corporate fundamentals in the united states are exceptionally strong? they are the strongest in the world, and i think that's kind of getting overshadowed here with washington a little bit. >> certainly is, certainly is. thank you very much. great conversation. just ten minutes away from the
closing bell for the day, market holding on to gains. >> markets trying to close with back-to-back triple-digit gains since july, and one sector is hitting historic highs that we'll talk about. >> oracle nearly doubled the return of the tech sector. will the software's company's latest rally newly the analysis? more coming up on the next hour of "closing bell." ♪ [ engine revs ] ♪ ♪ [ male announcer ] the mercedes-benz winter event is back, with the perfect vehicle that's just right for you, no matter which list you're on. [ santa ] ho, ho, ho, ho! [ male announcer ] lease a 2013 ml350 for $599 a month at your local mercedes-benz dealer. we believe the more you know, the better you trade.
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sharon epperson put out a note today saying gold went over its own fiscal cliff today, at its lowest level since august and is at the nymex with the latest details. >> reporter: when you look at the intraday chart of gold prices, can you see how the price started to drop and drop significantly as house speaker boehner was talking and then as white house press secretary jay carney offered his response to the plan "b" budget deal. we saw the prices fall to the 1,670 level and continued to fall breaking the 1,667 level and falling to an intraday low of 1,662, the lowest price since the end of august. keep in mind that gold prices have had a pretty good year so far. we're looking at a 7% gain in
the gold price and in the 12th on sective annual gain that we've seen in the price of gold if we stay on track and traders are looking for near term weakness thouwea weakness. >> as you mentioned, eight trading days left. >> amazing. >> after today, left this year. yesterday we told you about the financial sector hitting all-time highs. today we're looking at another of the year's strong sectors. this one is hitting an historic high, the consumer discretionary stock, up more than 25%. that's the s&p index of consumer discretionaries this year. >> and more broadly today, if the dow holds its triple-digit gain at close, up 113 today, it will have the first back-to-back triple-digit gains in nearly five month. market is up 113 points right here, and once again financials are certainly among the big leadership groups today. technology also doing well today. bill, you said this year's big
winners, last year's big losers, and it looks like we've got real momentum going into 2013. >> this is a market that want to go higher. don't want to sound like polyanna, but a market that just is itching to rally again. it's been held back by all the uncertainty about the fiscal cliff, and once you get that resolved, i think it want to go higher here. though the guest had a good point. i think it was john corpina, maybe you have a sell on the news at some point, but right now this market is anticipating something they want to go higher here. >> particularly given the fact there's 3.6 trillion in cash on balance sheets going into 2013. a lot of expectation that if we don't go over the cliff the economy is well positioned so long as we don't do something that's well-positioned. >> the other variable is what corporations do with that cash. if they put it to work. >> right. >> they start hiring, and we've heard plenty of ceos, they just want a resolution to the fiscal cliff and then they can get on with their business and make the plans. >> so much on the shelf right now, on shelf, m & a deals on the shelf, buybacks, dividend
increases. that comes off the shelf in 2013, if we have a smooth transition into the new year. >> i agree. >> or not. >> we'll come back here with the closing countdown in a minute. >> and after the bell home depot co-founder ken langone will join me to talk about the fiscal cliff and what it really takes if walmart is really unique in allegedly bribing its way into mexico. more with ken langone, my special co-host next hour. >> you won't get a word in edge-wise next hour, trust me. >> it's going to be great. i always wait until the last minute.
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. 90 seconds left. show you one chart. this really shows the story today. the market, still a lot of hope about the fiscal cliff negotiation, and we're going out on the highs of the day with a gain of 127 points on the dow. warren myers, first time since july we've had back-to-back triple-digit gains for the dow. that's amazing. >> hard to believe that it's been that long since we've had it. the market has been acting well. i must be getting a cue from the ten-year yield and watching this thing continuing to skyrocket. >> all the safe havens have gone higher. treasury, gold, the dollar you. >> get a sense that it's a real rotation out of safety net and the riskier assets. >> are we being too complacent. we're being bullish. >> are we overdoing this? >> in the short term we may be. one bad word from washington and the market will go down, but from a fundamental point of view, as i said before, 2013 i